Debt Counselling

Being in debt is when you owe money. If you are in debt, you don’t necessarily have to have financial difficulties.

Excessive debt is when you spend more than you earn and you are unable to pay your bills.

The first thing a debt counsellor does is to help you to find a way to cover your rent, energy costs and the cost of living. Debt counselling helps you gain an overview of your debts.

It is helpful to have all the documents you need to hand (such as bills, letters, late-payment warnings). It also helps to have a list of your creditors, too. Once you have this information, the debt counsellor will draw up a list of your earnings and expenses.

On this basis, your debt counsellor will help you to define some specific targets, such as preparing a debt repayment plan.

Debt counsellors can help you find a way out of your situation. They can provide assistance in legal matters and help you deal with what are often extremely stressful circumstances.

Your debt counsellor will help you gather together all of the documents you need. Bringing the following documents to your appointment would be a great first step:

• overview of your income and expenditure
• bills and late-payment warnings
• letters from official bodies and authorities
• late-payment warnings and enforcement orders, letters from court bailiffs
• letters from creditor representatives

It’s important that you always open your letters, as this is the only way your debt counsellor can get a good idea of your current situation and find out how to help. Some advice centres will go through your post with you and sort out the documents you need.

Debt counselling usually works as follows:

• Make an appointment with a debt counsellor.
• Go to the appointment.
• Discuss ways of safeguarding your livelihood and debtor protection.
• Review and plan a household budget and draw up a list of your debts.
• Negotiate with creditors.
• If necessary, prepare insolvency proceedings and help with filing for bankruptcy.

In your counselling you will describe your current situation and how you fell into debt. Excessive debt can affect anyone and everyone. Every situation is different, and debt counselling will give you the help you need.

Professional debt counselling from advice centres is usually free of charge.

It is available to people in debt and suffering from excessive debt all over Germany.

Government funding:

Most debt counselling services receive grants from German federal states or from the cities and municipalities in which those seeking help live. However, the government funding alone is often not sufficient to offer debt counselling services for free. In some federal states, higher earners who wish to receive debt counselling will have to make a small contribution. In almost all cases, the authority responsible for running the advice centre will also contribute to funding the service.

Be careful!

Some debt counselling services advertise online with “quick and easy” assistance, a “free first appointment” or “free debt analysis”. Often these services are used as bait for expensive debt counselling contracts. Make sure you know exactly how much your debt counselling is going to cost before you sign any contract. Here you can find out more about how to identify dubious offers.

If you have decided to take some active steps to improve your debt situation, you should be prepared to be in it for the long haul. Debt usually doesn’t accumulate overnight. It therefore isn’t a problem that can be resolved in a matter of days.

Talking about money, debts and the many different effects these topics have on our everyday lives requires trust. Often, it will only become clear at your first or second appointment whether you and your debt counsellor can establish a relationship based on trust. If not, talk about it. Addressing any issues may help to solve any misunderstandings. In some cases it is possible to switch to another debt counsellor.

The amount of debt does not matter. If your monthly earnings are not sufficient to meet all of your financial commitments (rent, energy, cost of living, loan repayments) over an extended period of time, you can fall into excessive debt. If you are unable to pay off your excessive debts – or even if you are worried that you won’t have enough money in the future – you should arrange a meeting with a debt counsellor.  

For many people, this is a difficult decision to make. However, the sooner you get professional help, the sooner you will be able to find a way out of your situation.

Advice centres run by charitable and non-profit organisations and local municipalities provide debt counselling free of charge. Ask for contact details at your local job centre or social services.

You can also use our advice finder at the following link.

Many debt counselling services offer emergency consultation. You can access this service if you are at risk of having your electricity turned off because you can’t pay your bills, for example, or if you are unable to access the money in your current account.

Waiting periods for regular debt counselling appointments vary from service to service and can be as much as several weeks.

The German Insolvency Statute (InsO) was introduced in 1999. It made it possible for private individuals to regulate their debts in court under certain circumstances and write off any remaining debts they may have (known as discharge of residual debt). Before initiating insolvency proceedings, you must have already attempted to reach an out-of-court settlement with your creditors.

Insolvency laws are extremely complicated in many areas, and the legislation stipulates that a “suitable person or agency” must assist and supervise in any attempts to reach an agreement with creditors. Before applying for insolvency proceedings, the suitable person or agency must confirm that you have attempted to agree a settlement but were unsuccessful.

• In order to qualify as a suitable agency, the debt and insolvency counselling services in many German federal states must prove that they employ qualified personnel and have extensive experience in the matter.
• Lawyers, tax advisers and auditors are usually considered to be suitable people.